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Rev. sci. tech. Off. int. Epiz.

, 1999,18 (2), 440-457

The economic implications of greater global trade in livestock and livestock products
J . Leslie
(1)

& M.Upton

( 2 )

(1) Veterinary Epidemiology and Economics Unit, Department of Agriculture, University of Reading, Earley Gate, P.O. Box 236, Reading RGB 6AT, United Kingdom (2) Department of Agricultural and Food Economics, University of Reading, Earley Gate, P.O. Box 237, Reading RG6 6AR, United Kingdom

Summary
T h e Uruguay Round of the General A g r e e m e n t on Tariffs and Trade ( G A T T ) established the W o r l d Trade Organization to supervise the reduction of barriers to, and liberalisation of, w o r l d trade. T h e application of sanitary and phytosanitary measures will be standardised to avoid use for protectionist purposes by countries or regional trade blocks. Harmonisation of animal disease control measures within regional blocks is essential if benefits to freer trade are to occur, but this harmonisation must be balanced against potential disease risks and costs associated with disease outbreaks. W o r l d trade in livestock products is concentrated among developed countries, although developing countries are responsible for approximately a third of poultry meat imports and exports. Despite liberalisation, the share of global trade by developing countries is unlikely to increase greatly in the short term. T h e benefits of trade and of freer trade are emphasised. Examples are given of the impacts of trade barriers on developing countries and of the harmonisation of European Union animal health standards. Economic implications for the future of greater global trade are a s s e s s e d .

Keywords
Developing countries - General A g r e e m e n t on Tariffs and T r a d e - International trade M e a t - Sanitary and phytosanitary regulations - W o r l d T r a d e Organization.

Introduction
The Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which established the World Trade Organization (WTO), has helped in formalising international pressures for trade liberalisation through the reduction of tariffs (taxes on traded goods) and quantitative constraints on market access and the reduction of competition from subsidised exports. In this context, technical regulations, such as animal health and sanitary controls on imports are seen as non-tariff barriers, which may hinder the ability of countries, in particular low income countries (LICs), to take advantage of the more liberal trade environment. These technical regulations should therefore be subjected to careful scrutiny to assess whether they are justified.

At the same time, the integration of groups of nations in free trade areas or common markets, requires the harmonisation of veterinary and animal health control measures among the members. In both these developments, the economic gains from freer trade must be set against the potential costs of relaxing controls on animal diseases, and of health and safety measures.

In this paper the above issues are explored in greater depth, as follows: - the historical background to the pressures for freer trade, and the growth of regional trade blocks are outlined - the benefits of free trade to both potential importers and potential exporters are examined

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- the costs of restricting trade are compared with the benefits of controlling animal disease - the analysis is illustrated with some case-study examples.

Pressures for trade liberalisation


With the development of improved communications of all kinds, recent decades have seen rapid growth of international trade. It is estimated that the total value of world trade is, as at 1998, equivalent to roughly one sixth of the aggregate income of the world; we all live and work in a global economy ( 1 1 ) . However, the growth of international trade has suffered set-backs, such as the great economic depression of the 1930s. The effects of this crisis were probably exacerbated by the fact that governments of the major trading nations adopted policies of protectionism; these countries restricted imports as a means of protecting their ailing domestic industries. Such policies, aimed at promoting greater self-sufficiency, were continued during World War II. Among the lessons learned was that removal of trade barriers is likely to encourage economic recovery and growth. To this end the GATT was established in 1947, with the objective of liberalising trade between the 2 3 countries which were party to the agreement. Since then, the volume of world trade has increased 16-fold, far more rapidly than aggregate income; while membership of GATT (now replaced by the W T O ) has risen to 132, with 3 0 other countries waiting to join, including Russia and China. The member nations are responsible for over 9 0 % of world trade (3). Over a series of 'rounds' of negotiation, tariffs have been reduced from 4 0 % by value in 1947, to less than 4 % in 1 9 9 8 ( 1 1 ) . The growth of trade in agricultural products has allowed a greater diversity of diets throughout the world and the establishment of international agricultural processing industries. Trade in livestock products was largely limited to cross border movements of animals, until the development of refrigerated transport in the 1890s. This lead to the creation of major livestock trading routes from the New World of the Americas, Australia and New Zealand to the Old World of western Europe. More recent patterns of livestock trade are discussed below. Price support for agriculture; including livestock, has long been the norm in the high income economies, although some countries, notably New Zealand and Australia, have abandoned the practice. In this context, the Common Agricultural Policy (CAP) of the European Union (EU) has become notorious for creating 'mountains' of surplus produce. Meanwhile, many developing countries, before and after independence, taxed agricultural exports to finance the general economic development of the country. Over the 1970s and early 1 9 8 0 s many of these countries used direct taxes on agriculture, including livestock, and levied tariffs on exports, whilst others taxed exports indirecdy, through the

exchange rate, by maintaining an overvalued domestic currency. The latter results in foreign exchange being artificially cheap, and imports and exports being undervalued. In effect, this means that agricultural and other export producers are effectively taxed by receiving an artificially low price, in the local currency converted at the official exchange rate. Similarly, the prices of domestic food crops are taxed in the sense that they are depressed by competition from artificially cheap imports. This is illustrated later in the case study of livestock trade in West Africa. These sets of conditions, whereby some countries subsidise agriculture, while others do not, provide scope for the former group to export surplus produce at a price below the cost of production in those countries where agriculture is not protected. This practice, known as 'dumping', provides unfair competition and a disincentive to domestic producers. In the latest round of GATT negotiations, known as 'the Uruguay Round' ( 1 9 8 6 - 1 9 9 4 ) , negotiations were extended to cover the problems of protectionism in the agricultural and textile industries. Under the Agreement on Agriculture, which was signed in April 1 9 9 4 , member countries were committed, by the year 2 0 0 0 , to: - improve access to imports through the removal of non-tariff barriers such as quotas (possibly replacing them with tariffs), the reduction of tariff levels and the agreement of an upper limit or 'bound' on tariff levels - reduce export subsidies by at least 3 6 % (a measure linked with the 'anti-dumping code' of GATT) - reduce aggregate measures of support for domestic agricultural producers by at least 2 0 % . These are the main commitments which were agreed, but there are many detailed exemption clauses and modifications. In particular, less stringent rules are to apply to developing countries, which have until 2004 to complete implementation. Furthermore, there is a 'safeguard clause' which allows any country to apply import restrictions or suspend tariff concessions if products are imported in such quantities and under such conditions that they may cause severe harm to domestic producers. However, there is speculation as to the extent that LICs will be able to benefit from these changes in market access given the stringency of technical regulations. An agreement was also reached on the associated application of sanitary and phytosanitary measures to provide a framework for standardisation and mutual recognition of food control and quarantine regulations and inspection procedures. These procedures will be based on international standards recommended by the Food and Agriculture Organization (FAO)/World Health Organization Codex Alimentarius Commission, on food safety, by the Office International des Epizooties (OIE), on animal health, and by the International Plant Protection Convention, on plant health

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and quarantine. However, the agreement does allow countries 'to set technical regulations above international standards, subject to specified conditions, without obligation to compensate foreign suppliers for the associated additional compliance costs' ( 9 ) . However, to restrict trade, for example, on animal health grounds, countries will have to show that a real difference exists in animal health status between the two countries, and that trade of the product presents a significant risk of introducing exotic disease. Despite these improvements, these restrictions may impose a considerable burden on exporters, even though domestic and foreign suppliers must abide by the same technical regulations. The W T O was established, under the Final Act of the Uruguay Round, to replace GATT and to strengthen the institutional framework for the supervision and implementation of the agreed measures, outlined above. The aim is that members will settle trade differences multilaterally within the W T O , rather than unilaterally or within smaller trading groups.

The overall impact of the formation of such trading blocks on world trade is mixed. Freer trade among member states is clearly promoted. However, where high tariff and non-tariff barriers are imposed on imports from other countries, as in the case of the EU, trade is restricted. One of the basic principles adopted by GATT and the W T O is that in trade there should be no 'favoured nation status'. Thus, no country may give preference to or discriminate against any other country. Similarly, imported products should not be treated less favourably than similar domestic products. The imposition of trade barriers on non-member countries clearly contravenes this principle.

In recent years, the number of regional integration agreements has rapidly increased, and more than 150 such agreements have been notified to GATT/WTO over the last 5 0 years. Apart from NAFTA, the Southern Cone Common Market (MERCOSUR) has been established in the Americas, while the Caribbean Community (CARICOM) serves fifteen islands in the Caribbean region. In Asia, several agreements exist: the Association for South-East Asian countries (ASEAN), the Asia Pacific Economic Cooperation (APEC) and the South Asian Association for Regional Cooperation (SAARC). Examples from Africa include the Central African Customs and Economic Union (UDEAC), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC).

The European Union and other trading blocks


World trade in agricultural products has been greatly affected by the formation and expansion of regional trading blocks. These range in closeness of integration, from the free trade area to the economic union, as follows: - a free trade area has no trade barriers between member states, which remain independently responsible for trade relationships with the rest of the world - a customs union has no internal trade barriers, but has a mutually agreed set of tariffs and trade arrangements with the rest of the world - a common market, like a customs union, but has freedom of movement of factors of production between member countries - an economic union has even closer monetary, fiscal, social and legal integration. An example of the first type of trading block is the North American Free Trade Agreement (NAFTA) formed in 1 9 9 4 by the inclusion of Mexico in the existing Canada-United States of America (USA) trade agreement. A typical customs union is the Preferential Trade Area of Eastern and Southern African Countries. Both the Central American Common Market and the East African Community had adopted some features of a common market until political differences among member states caused the break up of the associations, although the East African Community is shortly due to be relaunched. The European Common Market became the EU after ratification of the Maastricht Treaty in 1 9 9 3 .

Except for the EU, regional integration has not generated a high proportion of total trade for member countries. Of the examples listed above, only ASEAN has consistently shown trade between member countries exceeding 1 0 % of total trade for the association. In some cases, political or intra-regional conflicts have made the liberation of intra-regional trade difficult. However, problems also arise in cases where neighbouring countries within a region have a similar set of land, labour and capital resources and use similar technologies, so the countries all tend to specialise in similar products. Trade is most likely to occur, and provides greatest mutual benefits between countries with different patterns of comparative advantage.

The EU has succeeded in raising trade within the community to over 6 0 % of all trade, and in achieving rapid growth of agricultural production. This has been achieved by imposing quotas and taxes (variable import levies) on imports to the community, and by subsidising exports. These policies have raised food prices to EU consumers, created budgetary problems for the community and, it is argued, encouraged over-intensive levels of agricultural production, depressed with and consequential environmental problems. World market prices for agricultural commodities have been

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destabilised by EU policies, while many non-EU producers have been denied access to European markets ( 1 , 2 2 ) . Recent reforms have reduced the levels of protection for EU producers. The Lom Agreement (first signed in 1975 and renewed on four occasions), allows for special, 'favoured nations' agreements with former colonies of the African, Caribbean and Pacific (ACP) group. Certain commodity exports are allowed to enter the EU without tariffs, although are generally subject to quotas. Special arrangements exist for agricultural products, such as sugar and beef (Protocol 7 ) , which are also produced within the EU and are therefore governed by the CAP. Other Lom provisions include the European Development Fund which provides aid to ACP countries, and the stabilisation of export earnings (STABEX) scheme. Under the latter scheme, floor and ceiling prices are agreed for cotton, cocoa, groundnuts, coffee and sisal, in regular negotiations. Exporters are compensated, with cash or credit, when the export price falls below the agreed floor. Funds are recovered from the CAP exporters, when the export price rises above the ceiling. Over the mid-1990s, the ACP countries supplied 1 2 % of agricultural goods imported by the EU. However, these agricultural exports accounted for over 4 0 % of the total ACP exports to the EU.

Table I Per capita consumption of livestock products (kg/year) in 1996 (10)


Country Developing countries in Africa Developing countries in Asia All developing countries All developed countries Meat 12.18 22.56 23.92 75.78 Milk 33.22 34.68 42.37 196.64

The income elasticities of demand for meat, dairy products and eggs are generally close to unity. This means that growth, or decline, of incomes has a substantial effect on the quantities demanded. As populations and per capita incomes have risen in many parts of the world, so too has the demand for livestock produce. World production has expanded at a sufficient rate to raise average consumption per capita, except possibly in the case of milk (2, 2 1 ) . However, growth in production has not occurred equally across countries or products. Pig and poultry production has expanded much more rapidly than ruminant production, as discussed in more detail below. At the same time, trade in pig and poultry meat has grown faster than production of these commodities. In fact, only a small proportion of the livestock production of the world is marketed internationally. For example, world beef exports in 1 9 9 6 were 1.67 million tonnes ( 1 0 ) , approximately 3 % of world beef production (52.8 million tonnes). This may be explained by the high costs of transporting livestock and animal products from one country to another, except through cross-border trade. Generally, animal products must be frozen to permit intercontinental transport. Furthermore, existing health and hygiene regulations limit the extent of trade. The importation of feed grains and oilseeds to raise pigs and poultry domestically may be cheaper than the importation of the equivalent quantity of meat. Nonetheless, trade in these products greatly exceeds the trade in bovine meat as a percentage of total production ( 7 . 5 % for pig meat [of 7 9 . 4 million tonnes produced annually] and 1 4 % for poultry meat [of 5 6 million tonnes produced annually]). Until a few years ago, bovine meat (including beef and veal) represented the largest component of world meat trade in terms of both absolute quantity (in metric tonnes) and value. However, between 1 9 8 6 and 1 9 9 6 , bovine meat trade declined in relative terms, growing by 3 % annually while total trade in meats increased by over 5 % . Worldwide production stagnated, with 0 . 4 % growth. Quantities of ovine meat (mutton and lamb) produced (7.3 million metric tonnes) and traded (approximately 1.2 million tonnes), are much smaller than those of beef, and have declined by 0 . 3 9 % annually over the period 1 9 8 6 - 1 9 9 6 , although production has grown by a similar percentage. Pig meat production worldwide is growing by almost 2 % per year, trade in pig meat is growing by 5 . 4 % annually. Total world poultry meat production has grown rapidly, by more than 5 . 5 % annually, over the period

Global trade in livestock products


Although initially, most world trade and exports from the developing world consisted of agricultural products, these products have steadily declined as a proportion of the total. Many of the LICs which were largely dependent on agricultural exports, now rely more heavily on exports of oil, other minerals or manufactured goods ( 2 4 ) . This tendency is to be expected, partly because human food requirements are limited. Thus, 'the income elasticity of demand' for food (the percentage change in food purchases for a 1 % change in income) is generally well below unity. In addition, synthetic substitutes have been found or are emerging for many other non-food agricultural products, such as fibres. These tendencies have been diagnosed as potential causes of declining terms of trade for agricultural producers. Livestock products, by comparison with staple food crops, are relative luxuries. The value per tonne is much greater than for staple food crops, while the average consumption per person in the high income countries is several times higher than in the LICs (Table I).

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1 9 8 6 - 1 9 9 6 . However, trade in poultry meat has grown by an astonishing 1 2 . 6 % per year over the same period. The world market for beef, and to a lesser extent for other meats, tends to be divided between developed countries which require meat cuts differentiated by quality (quality table meat and manufacturing meat) and developing countries where the trade is mainly in whole carcasses. Prices differ between forequarters destined for manufacture and hindquarters destined directly for the table (as roasts, etc.). Prices differ for fresh and chilled meat as compared with frozen meat (G. Davies and J . Leslie, unpublished data). Historically, the best sales prices are for quality cuts sold in the EU. As a result, it is more profitable to trade in cuts, as these can be sold to different buyers according to market demand and prices, in such a way as to maximise profit. Trade in whole carcasses, does not offer the same opportunity. Table II shows that the majority of meat trade occurs between developed countries; between 7 7 % and 9 3 % of meat for export originates in developed countries and the bulk of bovine and pig meat is imported by developed countries. However, a higher proportion of poultry meat is imported by developing countries and sheep-meat imports are more evenly divided between developed and developing countries.

more liberal, beef quotas have been expanded and in 1991 were replaced by a tariff of 7 0 % , which was reduced to 5 0 % in 1993 and will be reduced to 3 8 . 5 % by 2 0 0 1 (6). Some beef trade flows back from the USA and Canada to the Far Eastern countries. Recently, beef from North America has been exported to the Russian Federation. Several large exporters are members of the EU. As a trading block, the EU accounts for nearly 3 6 % of the total world exports. However, several of the major importers of bovine meat are also members of the EU, which suggests that much of the trade occurs between member countries. However, Western Europe is also involved in the so-called Atlantic Trade, with imports from South America, and exports to the Middle East and Africa, as well as with the former Union of Socialist Soviet Republics (USSR). The relative importance of Europe as a beef exporter is largely due to the price support policies and the surpluses in the intervention stocks. The world market for ovine meat is dominated by New Zealand and Australia, the two main producers, which together produce nearly 7 0 % of world exports. Much of this trade is absorbed in the Near East, where sheep meat has religious significance, and South East Asia (see Table B). While worldwide pig meat production is growing by almost

Table II World meat trade in 1997, excluding live animals (10)


(Percentage of total given in brackets)
Commodity World total Bovine meat Sheep meat Pig meat Poultry meat Developing countries Bovine meat Sheep meat Pig meat Poultry meat Developed countries Bovine meat Sheep meat Pig meat Poultry meat 5,705 (82) 798 (93) 5,571 (92) 5,384 (77) 5,284 (77) 579 (68) 5,267 (91) 3,913 (63) 1,241 57 481 1,617 (18) I7) (8) (23) 1,596 521 (23) 276 (32) (9) 2,353 (38) 6,946 (33) 855 6,051 (4) (28) 6,880 855 5,789 6,266 Exports (tonnes x 10 ) Imports (tonnes x 10 )
3 3

2 % per year, the growth in trade is largely confined to the northern hemisphere, since consumption in Africa and Latin America is low, and largely provided by domestic production. Australia and New Zealand are largely self-sufficient. Major exporters and importers are listed in Table C. Denmark is the largest exporter, much of the meat going to Japan, China or other parts of the Far East. China also exports substantial quantities of pig meat to the Russian Federation and other countries of South-East Asia. Although the USA imports pork from Canada, both these countries are net exporters, much of the produce going to Japan. Total world poultry meat production has grown rapidly, by more than 5 . 5 % annually; during the period 1 9 8 9 - 1 9 9 9 , but trade has grown by an astonishing 1 2 . 6 % per year over the same period. This reflects the fact that the price of chicken is falling relative to other meats, as well as the widespread belief that white meats are healthier than red meats, in addition, poultry are readily processed into frozen convenience foods. Major exporters and importers are listed in Table D. The USA is the largest exporter of poultry meat, alone accounting for over a third of world trade. Much of the American export production is sold in Japan and other countries of the Far East. This trade grew rapidly in the 1980s, partly assisted by the Export Enhancement Programme, a form of government assistance aimed at stimulating American agricultural exports. Other notable exporters include Brazil, France, and Thailand. The Russian Federation, Japan and China are alone responsible for 4 0 % of world imports.

7,002 (33)

These general patterns of trade are further demonstrated by country trade patterns, which are summarised in the Appendix Tables A to E. The ten most important exporters and importers of bovine meat (in 1996) are listed in Table A. Australia and New Zealand are major exporters in the Pacific Zone, where the USA, Canada and South East Asian countries such as Japan and Korea are major importers. Until 1988, the Japanese domestic market was protected by import quotas and a 2 5 % ad valorum tariff. Since then, markets have become

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The statistics for dairy products are combined with those for eggs, although the latter account for only a small proportion of the total. For most exporters and importers, eggs in shell represent roughly 1 % of the total. Exceptions are the Netherlands where eggs represent 1 6 . 4 % of total dairy product and egg exports, and Germany, where eggs make up 1 7 . 5 % of the broader category of imports. Trade in dairy products and eggs exceeds that for all categories of meat, both in quantity and value. Between 1 9 8 6 and 1 9 9 6 , trade has grown by 3 . 4 % annually. Most of the major exporters and importers of dairy products, given in Table E, are members of the EU. Thus, a great deal of the trade in dairy products takes place between EU members. However, significant amounts are exported to all parts of the world, particularly to Latin America and to the former USSR. Australia and New Zealand are important exporters of dairy products, particularly butter, mostly supplying South East Asian countries, although some is sold in the United Kingdom (UK) and other EU countries, and in Latin America. The USA exports mainly to Mexico. The EU has, in the past, exported substantial quantities of dried skimmed milk powder and butter-oil to India and some ACP countries. In some cases this was supplied as food aid, while in India, the imports have contributed to the supply of milk through 'Operation Flood'. However, some of this trade is seen as a means of disposal of embarrassing surpluses, and therefore as a form of 'dumping'. Trade opportunities for the developing world will depend on the ability of these countries to penetrate and compete for slow-growing higher-value markets in developed countries, or to supply higher volumes of meat and animals to low and middle income countries such as South Africa where the markets are of low value but are expanding more rapidly.

Table III Comparative advantage and the benefits from trade


I. P r o d u c t i o n per w o r k e r in Europe and Latin A m e r i c a Continent Europe Latin America M e a t (tonnes) 15 10 Motor cars 4 2 T o n n e s of meat/ car 3.75 5.0

II. Effects of t r a n s f e r r i n g s i x E u r o p e a n w o r k e r s into motor c a r production and t e n Latin A m e r i c a n w o r k e r s into meat p r o d u c t i o n Continent Europe Latin America Total p r o d u c t i o n M e a t (tonnes) -90 +100 +10 Motor cars +24 -20 +4

III. T r a d e o c c u r s w i t h E u r o p e selling 22 motor c a r s for a p r i c e of 4.5 t o n n e s of meat e a c h Continent Europe Latin America M e a t (tonnes) +9 ( = - 9 0 + 99) +1 (= + 1 0 0 - 9 9 ) Motor cars +2 ( = + 2 4 - 2 2 ) +2 (= -20 + 22)

also has a 'comparative advantage' in manufacturing motor cars, Latin America has a 'comparative advantage' in meat production. This may be expressed in terms of 'opportunity cost', which is the cost of producing an item in terms of the alternatives foregone. Thus, the opportunity cost of producing a motor car in Europe is only 3.75 tonnes of meat, while in Latin America it is 5 tonnes of meat. By the same token, the opportunity cost of meat production, in terms of motor cars foregone, is lower in Latin America than in Europe (0.2 cars rather than 0 . 2 6 7 ) . If each country moves resources into producing the commodity for which it has a comparative advantage, total output of both commodities can be increased (see Section II of Table III). In the absence of trade, however, Europe may suffer a shortage of meat and Latin America a shortage of motor cars. This problem can be overcome through trade, which then allows both trading partners to have more of both commodities (see Section III of Table III). In this example, it appears that Europe benefits rather more from the trade, since it gains an extra 9 tonnes of meat, whereas Latin America gains only one additional tonne. However, this depends upon the relative world prices of meat and motor cars, or the 'terms of trade' for the producers of these commodities. Mutual benefits can be obtained, in this example, for any price ratio of cars to meat between 3.75 and 5.0. This theoretical analysis leads to the general conclusion that free trade leads to increases in production and incomes for all participants. Differences in comparative advantage between countries depend upon the available resources of land, labour and capital and the available technology. Where some countries

The benefits and costs of trade


The international enthusiasm and pressure for trade liberalisation stem from the supposed advantages of trade to all participants. These advantages are illustrated by the theory of Comparative Advantage, originally formulated by the English politician and economist, David Ricardo in 1 8 1 7 ( 1 9 ) . He argued that if two countries (or regions, or continents) are considered, each with different relative costs of production of different commodities, then both countries will gain from trade, even if one has an 'absolute advantage' over the other, i.e. lower costs of production for all commodities. This is illustrated by the simple hypothetical example given in Table III. According to the figures presented here, Europe has an 'absolute advantage' over Latin America, in that productivity per worker is higher in both meat production and motor car manufacture. This implies that unit costs (at least for labour) are lower in Europe. However, while Europe

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have surplus, unused land or unemployed labour, they have a comparative advantage in the production of land-using or labour-intensive products. The situation has been described as one of a 'vent for surplus', where unused resources can be employed in producing commodities for expon. Thus, trade can lead to the reduction of unemployment, and through the transfer of new technology between trading partners, to a shrinking of international differences between wages and other factor incomes. Other advantages of trade are associated with the potential expansion of markets, and the associated lowering of production and marketing costs due to 'economies of scale'. At the same time, trade widens the variety of products available to consumers. The development of a country is aided through trade, due to the enhanced growth in productivity that results from improving technology and expanding resources with specialisation. However, the promotion of unfettered free trade has always had some opposition. In particular, emphasis has been placed on the dangers to LICs of exploitation by richer countries or transnational companies. This, together with the predicted decline in the terms of trade for agricultural products, led many LICs to adopt import substitution strategies. This often required protection of the 'infant industries' against cheap imports from overseas. Williams et al. provide a wider discussion of the implications of national economic policy on trade, protection and the implications for the livestock sector (27). Trade may reflect 'unequal exchange' where foreign capitalists move into LICs to benefit from the low wages, by selling at low prices and expatriating profits. At present, some transnational companies are moving not only to benefit from lower wages but also from rapidly expanding urban markets, particularly in the case of perishable products such as dairy and egg products. In certain areas, such as Tanzania, it is profitable to establish plants to reconstitute cheaper powdered milk imports, given the problems and costs in developing the emergent smallholder dairy sector. This is posing a dilemma for LICs which are faced with the need to increase low cost food for expanding urban areas, and at the same time to provide income and employment for rural areas. Dependency theorists have argued that comparative advantage is not determined by 'natural differences' in relative factor endowments but by 'negotiated differences' in wage rates and technologies imposed by colonialism and unequal exchange in the past. Thus, international trade is seen as a cause of 'underdevelopment'. However, the criticism really applies to trade which is unequal and subject to restrictions, rather than to free trade. Concerns that trade liberalisation may have adverse effects on the environment are also growing. First, a series of national laws, aimed at protecting the environment or the health of humans, animals or plants, have been challenged by W T O

settlement tribunals. An example is the long-standing EU ban on beef treated with growth hormones, like that produced in the USA, which is currently under review by the W T O . Second, there are concerns that the W T O rules may undermine international agreements to protect the global environment, known as multilateral environmental agreements or MEAs. The rules of the W T O (Article X X of the GATT) do allow countries to impose trade restrictions 'necessary to protect human, animal or plant life or health...(or) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption'. However, whether restrictions really are necessary for health or environmental reasons, or whether they are basically protectionist in intent or effect is left open to debate. It is argued that the EU ban on hormone treated beef is essentially of a protectionist nature (3). The current W T O arrangements for dispute settlement are far stronger than those of the GATT. If one government believes another is blocking imports in breach of W T O rules, it can request talks. If these talks fail then a panel of trade officials may be asked to adjudicate and if these officials find that the rules have been broken then the offender is required to amend its laws and practices to conform with the W T O rules. Appeals are possible, but once a final decision has been reached, it can be reversed only by a consensus of W T O members. There is no power of veto by individual members of the organisation. The W T O is clearly able to question, and force the amendment of laws passed by sovereign governments. This understandably gives cause for concern to those who feel that environmental damage or greater dangers to health will result from freer trade. However, the W T O is itself the result of an agreement between sovereign nations, aimed at the rationalisation and regulation of free trade in the common interest of all members. Difficult questions remain regarding the total social costs and benefits of particular trade restrictions imposed for environmental or health reasons. The more specific case of animal health and hygiene regulations, which is most relevant to trade in livestock products, will be described next.

Sanitary and technical barriers affecting international trade in livestock and meat
Technical regulations relating to quality characteristics, conditions for product presentation or description (e.g. labelling, packaging and information) and specifications on consignment procedures (testing, inspection and

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quarantine) may be contained in standards approved by a recognised body. Such standards relating to animal health and food hygiene are probably the most serious constraint on the expansion of international trade in meat, particularly between exporters in LICs and high income country importers ( 1 7 ) . These technical requirements are often imposed in order to protect human, livestock and plant health, the environment, wildlife, or national security. The FAO reports that a United Nations Conference on Trade and Development (UNCTAD) database on trade control measures, has 3 , 9 5 9 records of non-tariff measures, 3 0 % of which relate to health and safety issues and which would affect trade in meat and livestock products (9). There is growing concern about food safety resulting from the following: - food-related illness, e.g. Salmonella Enteritidis infection

Organization) 9 0 0 0 . However, the costs of implementing these new procedures will add to the costs of meat. The costs of implementing new safety standards are similar for all plants, and as a result, the costs per tonne of meat in smaller, lower throughput plants are likely to be higher, making them less competitive. The analysis of the full costs and benefits of such regulations is highly complicated. Not only are many livestock species and many types of disease risks involved, but also the The arrangements are applied to groups of countries.

discussion may be simplified by considering the impacts of a single cattle disease on just two countries, 'A' a potential importer (with disease controls), and 'B' a potential exporter (but without disease control). Therefore, it is assumed that initially no trade occurs, although the price of beef is higher in Country A than in Country B. If imports from Country B were allowed by Country A, despite the inadequate disease control in the former, the price at which beef is traded would settle at a level between the previous national prices. Thus, the price of beef in Country B would rise. This would benefit cattle producers in that country, and might increase employment prospects in the cattle industry, but consumers would face the prospect of having to pay more for beef. Nonetheless, economic theory suggests that the gains to producers would outweigh the costs to consumers, so there would be a net welfare gain. The situation in Country A is more difficult to predict. If disease incidence does not increase as a result of the imports, or if the disease has a negligible impact on domestic production, then beef producers would simply suffer a fall in price resulting from the competition from cheap imports. However, the gains to consumers from cheaper beef would outweigh the losses to producers. If, on the other hand, a disease outbreak occurs following the importation of beef, domestic cattle production will fall, and/or the costs of production will rise. As a result, the incomes of cattle producers will be squeezed between the falling beef price and the rising costs due to the disease. In practice, the government may meet some of these costs, for instance by compensating cattle producers for disease losses. Regardless of who pays, the total cost to society, in Country A, is now likely to outweigh the gains to consumers from lower beef prices. Since the economic outcome of allowing imports depends upon whether a disease outbreak results, risk analysis is needed to assess the overall costs and benefits. The calculation of the probability of a disease outbreak is fairly complicated, depending as it does on whether the imported product is infected, whether the infective agent survives commodity handling, treatment and transport, whether the commodity is exposed to susceptible animals or man, whether the agent is

- residues in food from various sources including agricultural chemicals and antibiotics - limited experience with innovations in food production and processing, e.g. use of hormones or irradiation of foods - speculation that certain diseases (e.g. bovine spongiform encephalopathy), as yet not recognised as transmissible to humans, may become so. These types of regulations are not new. The EU will only import meat under Protocol 7 of the Lom convention and this must come from herds free of foot and mouth disease (FMD), tuberculosis, brucellosis and other diseases which have been eradicated within the Union. The domestic meat market is often supplied from animals slaughtered the same day, without the use of refrigeration (G. Davies and J . Leslie, unpublished data). Meat for export would have to come from animals slaughtered and handled in EU inspected facilities specifically constructed for this trade, which meet stringent food hygiene and sanitary conditions, whilst the meat must be inspected by EU approved veterinarians. ACP countries wishing to take advantage of a Lom export quota must set up disease-free livestock production and slaughtering systems at high cost. Trade from Kenya, Madagascar and Swaziland, for example, was reportedly constrained in recent years by a lack of EU- approved slaughterhouses ( 1 1 ) . Construction and running of such facilities is problematic, particularly so where the volume of throughput is extremely variable and rarely reaches plant capacity. This is especially true of beef plants, particularly those depending on livestock raised in arid and semi-arid areas. This helps to explain why the bulk of exports from these areas are transported as livestock rather than meat (9). As part of a move towards a more targeted risk management approach, new procedures, such as the application of 'hazard analysis critical control point' are becoming integrated into national and international traded food standards, e.g. part of total quality control in ISO (International Standardisation

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exposed to a portal of entry and is transmissible, whether the agent induces infection and whether the infection induces disease. The extent of the damage must in turn depend upon the scale of the importation, the rate of spread of the disease, the probability of detection and the methods of treatment available ( 1 6 ) . Quantitative risk assessment, as outlined by Morley (16) and others, does not alone provide an evaluation of the case for excluding imports. This full analysis may be attempted in terms of the 'expected money value' (EMV), estimated as the sum of products of all possible financial outcomes multiplied by their respective probabilities.
EMV = E Xi
P i

The harmonisation of animal disease control measures, within a regional trade block or free trade area, is clearly essential if all trade barriers are to be removed. In so far as some member states may previously have imposed restrictions on imports from other members, the calculations might be similar to those discussed above. In other instances, different methods of control have been used by different member states, so a consensus must be reached on the best method of control for general adoption. Here, assessment is again needed of the risks of disease outbreaks occurring under the different health regimes, in order to evaluate the alternatives. A good example relates to the choice of a FMD control strategy for the EU ( 5 ) .

The case of Uruguay


Earnings from meat exports by developing countries in 1 9 9 3 amounted to over U S $ 5 , 0 0 0 million, with a further U S $ 2 , 0 0 0 million from livestock exports. ( 9 ) . Twenty-nine low or middle income countries are identified by the FAO as accounting for over 9 0 % of meat exports from developing countries (9). However, the developing countries as a whole accounted for only 2 8 % of global meat exports in 1994, compared with their share in world production of 4 7 % . Some of the reasons for this have already been discussed. The case studies that follow look at the situation of three of the twenty-nine countries mentioned above. The three examples of Uruguay, Botswana, and West Africa are used to illustrate changing livestock trade and the influence this trade exerts on the economies of the countries ( 2 0 ) . Livestock and livestock trade are vital components of the national agricultural product of the countries in question, and in Uruguay and Niger in particular, generate significant export earnings. Each of the three regions have natural conditions offering comparative advantages in livestock production and specialisation. The market and export conditions and opportunities of each are very different, thus changes in world trade and animal health and hygiene regulations will affect each differently.

where Pi = probability of the ith outcome Xi = ith financial outcome. The following conditions should be noted: - the calculation of expected money value may require more sophisticated tools (such as dynamic programming, or Monte Carlo simulation) than ordinary cost-benefit analysis - full account should be taken of the effects on prices of allowing imports and of disease outbreaks - no account is taken of the costs and benefits experienced by other countries. This analysis, based solely on economic costs and benefits, takes no account of risk aversion (i.e. public willingness to forego income, on average, in order to avoid risk) on the part of the people of Country A, nor of the subjective satisfactions that might be derived from a disease-free environment. 'A figure which denotes an acceptable business risk to the entrepreneur may be quite unacceptable to the representatives of the established livestock industries' ( 1 4 ) . This area is one of possible conflict with the W T O assessors. However, an economic assessment should provide a starting point for negotiations. Country B may also wish to review its policies regarding animal disease control and hygiene, to improve the health and productivity of the domestic cattle industry as well as to meet the requirements of potential beef importers. The benefits to local beef producers, of controlling disease, may be smaller than in Country A if, for instance, domestic cattle carry a high level of genetic resistance, or if the level of production per animal is inherently lower and the costs of the disease are thus reduced. Nonetheless, the prospect of increasing export earnings from sales of beef may be sufficient to swing the economic balance in favour of introducing health and hygiene controls. Again, elements of risk are involved and the effects of increased trade on domestic prices should be taken into account in assessing the economic effects of the changes.

Changes in disease status: potential impact on current and future livestock trade expansion
In 1 9 9 6 , Uruguay was the first member of the countries in the 'agreement of the Plate Basin' to be recognised by the OIE as an FMD-free country without vaccination. (The 'agreement of the Plate Basin' is a regional agreement originally developed between Argentina, Uruguay, Brazil and Paraguay with objectives to control and eradicate FMD.) Recognition of FMD-free status has provided immediate and longer term opportunities for trade. Uruguay was immediately able to take up a 2 0 , 0 0 0 tonne country quota for the export of beef to the USA and to negotiate for additional quotas and sales to FMD-free markets (previously the USA quota had not been fulfilled as Uruguay was unable to meet the animal health regulation relating to FMD freedom) ( 1 3 ) .

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The direct benefits of the change in disease status can be seen in the increase in foreign exchange revenue from both increased volume and/or better export prices, and in the intangible benefits of early market access to the international FMD-free meat market (the importance of effective marketing and the establishment of markets before other larger producers such as Argentina and Brasil are able to enter these markets are important for future market maintenance). The estimation of trade benefits is complex as the prices received vary greatly between markets and are affected by the type of cut, quality specifications, transport costs, market agreements (spot buying or forward contracts) and local supply and demand conditions. In countries or regions in which trade is limited by policies other than sanitary agreements (e.g. the EU), trade related changes are limited but, given W T O agreements, can be expected to grow with time (18). The potential long-term trade impact on the country will depend on the competitiveness of the sector and its exports, both internationally, and compared specifically with larger neighbours Argentina and Brazil. The four components which are important in considering likely sector impact are as follows: - opportunities to improve the value of trade - scope for improved competitiveness of the processing/ trading sector (spare capacity, lower processing costs, market development activities) - incentives for producers and the effect on investment, productivity, and long- (and short-) term supply and the distribution of the benefits between large and small producers - opportunity costs for domestic consumers (changes in domestic beef market: quantity, quality and price and the impact on beef substitutes). The issues and main points are summarised in Figure 1.

O p p o r t u n i t i e s to i m p r o v e t h e v a l u e of l i v e s t o c k exports
In the first six months of 1996, Uruguay had exported a total of 1 1 2 , 6 5 6 tonnes of bovine meat and meat products to the value of U S $ 1 9 5 , 3 0 6 . In the same period of 1995 these figures were 8 2 , 7 1 1 tonnes worth U S $ 1 6 2 , 5 5 2 (prices calculated at 1996 values), an increase of 3 6 % and 2 0 % respectively, in part accounted for by the export of chilled and frozen meat to the USA. In 1995, Uruguay had a country quota to supply the EU with 6,500 tonnes of high quality cuts. The change in animal health status provided the opportunity to supply a wider range of lower value products to the EU, including lamb and beef with bone, manufacturing meat and offal. Also important to Uruguay in improving the value of exports was the additional flexibility that an expanded market can offer to exporters wishing to increase the total return per carcass, and the scope offered to widen the markets served and reduce dependence on any one market. Market stability was, and still is, very much influenced by the irregular purchases of meat and live animals by Brazil.

O p p o r t u n i t i e s t o i m p r o v e t h e c o m p e t i t i v e n e s s of t h e processing industry
Uruguay is in a good position to take advantage of changes in demand for processed meat in other areas of the world. The country has low processing costs compared with New Zealand, the USA and Australia. Increases in the volume of exports and improved export and 'farm gate' prices are important to maintain and improve the financial viability of farms, abattoirs and processing plants. This in turn, would generate further benefits through increased employment in the livestock industry and related services. In 1995, 3 4 abattoirs were in use in Uruguay. The seven largest plants handled 4 9 % of bovine throughput in 1994, while the medium plants handled 4 3 % . Although this provided conditions for competition, it also resulted in considerable under-used slaughterhouse capacity. Of the total slaughterhouse capacity, 6 1 % could be used for export purposes, however only 3 5 % was used in 1996. This resulted in higher operating costs and lower profitability. The potential export opportunities and the optimism of the sector are factors in attracting new sources of capital into the sector. This is important if the sector is to continue to meet the increasingly stringent standards (e.g. ISO 9 0 0 0 ) of high value export markets.

B e n e f i t s to p r o d u c e r s a n d c o n s u m e r s
e: elasticity

Fig. 1 Impacts on livestock sector stakeholders from animal health improvement

National herd offtake and exports both increased before and after the change in disease status, due to herd rebuilding after the 1 9 8 8 drought. If exports are to continue to increase (without a loss of consumer welfare in terms of increased

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domestic prices and reduced domestic supply), then offtake must continue to increase. In the longer term, producer returns can only be improved if output and livestock productivity are improved. Considerable scope exists to improve livestock productivity, and can be expected to occur, provided the benefits from trade are relayed through the markets as producer incentives. As in any situation where a variety of production and farm systems exists, the impact of these changes will differ between groups.

The Lom Agreement and the beef protocol: the case of Botswana
Botswana and West African countries such as Niger have contrasting livestock service infrastructures and access to markets. Cattle is the third largest export category for Botswana after mining and tourism. The importance and impact, on the economy as a whole, of the cattle industry is much greater than almost any of the other sectors making up the economy, according to analysis by Townsend and others (23) (based on a general equilibrium framework, using a social accounting matrix). The cattle sector is particularly important as a source of income in rural communities, which in Botswana is where the greatest poverty exists. A decline in cattle exports would not only affect rural incomes and purchasing power but would also impact on the animal feeds and the meat and meat products industries. An increase of 1 million Botswana Pula (BWP) (BWP1 = US$4.6, as at 0 9 . 0 3 . 9 9 ) in cattle output is estimated to generate an increase in national gross output of BWP8.89. (A BWP1 million increase in output in the mining industry would only generate a BWP5.39 increase in national gross output). Botswana benefits under the Lom IV Agreement (effective from 1990) under which certain ACP countries have special access to EU beef markets until the year 2 0 0 0 . All ACP exporting countries only pay 8 % of the import levy. Although Botswana is not declared free of FMD, the EU applies a 'minimum risk' policy (countries such as Mexico, Japan, USA and Korea apply zero risk policies, importing only cooked or canned meat from countries without status of FMD freedom). Under this minimum risk policy, deboned frozen meat processed by inspected and recognised slaughter facilities and sourced from specific areas with defined and enforced health controls is accepted for import to the EU. Although the notion of risk adopted by EU importers and its consequences for market access are not in contravention of the GATT rules, as members are '...not prevented in adopting measures necessary to protect human animal or plant life or

health', minimum risk (as opposed to zero risk) does contravene the MFN (most favoured nation status) requirements of the W T O . Under these requirements, the EU should offer other countries the same terms as it offers to suppliers under the Lom Convention. 'The 1 9 9 4 Uruguay Round Agreement on SPS [sanitary and phytosanitary] measures represents a major break through in this respect as it introduces the obligation for countries to base these measures [of 'minimum' risk] on scientific principles, and encourages them to adhere to internationally agreed standards and makes provision for "pest and disease free areas", which implies the acceptance of freedom from a zone rather than an entire country' (9). Botswana has a long history of trade with the UK and the EU, and from 1990 to 1995 has fulfilled 7 0 % of its EU import quota, with shipments averaging 13,600 tonnes. It has been the most reliable of the ACP suppliers in terms of annual continuity of shipments, with few disruptions (e.g. due to disease). Without the Lom Agreement, Botswana beef exports would be reduced in value by possibly 5 0 % . Average prices in March 1996, to supply frozen hindquarters to the EU, were B W P 1 2 , 7 0 0 per tonne free on rail (f.o.r.). The alternative was to supply these to South Africa at an average of B W P 7 , 3 7 0 per tonne f.o.r. However, price differentials for lower quality forequarters were smaller, at approximately 5 % . Botswana may be able to explore new markets such as Russia or the Middle East, and is well situated to supply the increasing demands from the South African market, but might face increasing competition from countries which are expanding livestock production, including Latin America and the EU. Unlike Uruguay, Botswana does not have FMD-free status, and thus would not be able to take advantage of changes in market access affected by the W T O , unless the disease status of exports can be demonstrated scientifically.

European Union restitutions for meat exports and the impact on livestock trade in West Africa
Historically, the Sahelian countries, such as Burkina Faso and Niger, supplied the coastal areas of West Africa, including Ghana, Nigeria, and Cte d'Ivoire. The Sahelian countries supplied surplus beef to the coastal countries in competition with frozen beef imports from South America and Europe. The livestock trade of West Africa draws on animals mainly sourced from pastoralists and smallholder sedentary mixed farmers. These farmers sell their animals to purchase cereals, pay school fees, taxes and medical costs ( 2 5 ) . Commonly animals are used as a form of precautionary savings or an insurance against crop failure. The existent trade routes are efficient (25), i.e. producers receive between 7 6 % and 8 2 % of

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the retail price of the animals. This highlights the potential link and impact that retail market prices can have on rural producer incomes. This is especially true in times of entitlement failures and famine. Market prices, as shown later, can be affected by EU imports. Livestock prices are detennined by a variety of forces affecting both supply and demand for livestock. Demand is strongly influenced by urban demand, in turn affected by the local economies, and most notably by changes in primary commodity cycles (e.g. oil and metals) ( 7 ) . Supply is affected both by drought and by market prices. In the 1980s, meat and livestock markets were distorted by the following: - the overvalued CFA ( Communaut financire africaine) franc exchange rate, used in the francophone zone of West Africa - heavy subsidies on beef exports from Europe. Market distortions were reduced in 1 9 9 4 when the CFA franc was devalued by 5 0 % and as a result, imports became relatively more costly compared with local goods. The EU subsidy or export restitution was also progressively reduced due to reductions in EU producer prices and a resulting decrease in intervention stocks. Table IV shows the effect of the devaluation and also illustrates the extent of the EU export subsidy, and the implications for retail prices ( 2 5 ) .

The price increase for imported frozen EU beef was accompanied by a large drop in these imports, which were replaced by an increase in Sahelian imports. Without competition from lower-priced products, the fresh meat prices increased by 1 5 % - 2 0 % to between 8 5 0 CFA and 9 0 0 CFA per kg. This price increase would, in turn, be fed back to Sahelian producers (4). The EU production has outstripped consumption and demand since 1 9 9 6 , and has necessitated further intervention buying due to the increased number of EU member countries, the relatively high producer prices/income support in spite of the GATT agreement and the reduction in beef consumption (seen in both the long and short term). The extent to which this meat can be disposed of on world markets and the extent to which it can re-enter and distort this particular West African market remains to be seen, given W T O agreed limits on the sale of meat with export subsidies (subsidised exports are agreed to be no more than 8 1 7 , 0 0 0 tonnes [a 2 9 % decrease compared with 1995]).

Regionalisation, free trade and animal health


It has long been recognised that many transboundary diseases can only effectively be tackled on a regional basis e.g. the Pan-African Rinderpest Campaign in Africa, or the Southern cone agreement in South America for FMD eradication. A high proportion of livestock trade occurs in live animals across national boundaries, and is often illegal and/or unrecorded. Countries are wise to recognise this in disease surveillance work, for example, changes in relative livestock prices in Uruguay and in pigs and beef in Brazil should act as an early warning to strengthen or increase surveillance. The benefits of regionalisation in terms of trade and harmonisation of animal health standards are as follows: - the increase in intra regional trade compared with imports from other trade blocks (e.g. developed countries) - more efficient resource allocation and better productivity within a region according to comparative advantages. It could be argued that better disease status is a form of comparative advantage - the development of larger 'disease free areas' reducing potential disease risks (e.g. in the case of the EU and Southern cone countries) and reducing regional disease control costs (e.g. rinderpest control in Africa, and FMD control in the EU). However, the EU single market agreement of 1 9 9 3 has had mixed results. It has allowed animals to be transported more widely without intermediary animal health checks, which can reduce transaction costs, contributing to more competitive markets, and can arguably reduce the period of transit of live animals. Nevertheless, the single market may encourage a

Table IV Costs of European Union meat at different stages in the export to retail chain (25)
Cost (CFA f r a n c s ) prior to devaluation (1993) 608 541 67 67 40 17 191 67 70 20 100 448 80 528 Cost ( C F A f r a n c s ) post devaluation (1994) 1,216 983 233 133 40 30 436 90 70 36 50 682 120 802

Cost s p e c i f i c a t i o n

Purchase price (Europe) European Union subsidy f.o.b. E u r o p e Freight Transit/sanitary inspection Profit margin exporter c.i.f. W e s t A f r i c a Import taxes General costs Profit margin importer Import levy Wholesale price West Africa General costs/profit margin Retail p r i c e
f.o.b. : free on hoard
CFA : Communaut financire africaine

c.i.f. : customs insurance and freight

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wider distribution of animals and could widen the area of epidemic disease risks (e.g. classical swine fever and Newcastle disease). Since 1975, Northern Ireland has maintained a status of freedom from Newcastle disease without vaccination. Since 1993, five major poultry diseases (infectious laryngotracheitis, mycoplasmosis, avian rhinotracheitis, Marek's disease and Newcastle disease) have been re-introduced: less demanding animal health controls associated with the free market are thought to have contributed. However, feasible vaccination regimes now exist to control the diseases, and the costs of preventive control are potentially much lower than previously. The benefits to trade of a disease-free status (without vaccination) are small, given the small numbers of countries in this position. For example, the recent outbreak of Newcastle disease in Northern Ireland prompted the Province to alter the disease policy in practice to one of disease freedom with vaccination, this illustrates the changes in control costs, and changed attitudes to disease freedom resulting from changes in world trade requirements. The poultry sector in Northern Ireland is mostly concerned with high value products such as parent eggs and chicks, and the processing of poultry meat into 'fresh' and 'convenience' value-added products which is aided by the relative advantages held by the region, of lower labour costs and proximity to UK supermarkets which are the major market outlet for processed poultry goods in Europe. In 1973, an outbreak of Newcastle disease cost 3 . 5 million (at 1997 prices) to control; an equivalent hypothetical outbreak in 1997, taking account of changes in the industry structure would cost 2 . 3 million to control ( 1 2 ) . The control costs (including compensation payments) were estimated to be 7 6 % and 5 8 % respectively of the total sector costs. Sector costs would also include the costs to producers and to the industry for increased storage and processing costs, the lost production and lost trade and export markets (but do not include linkages with other sectors or multiplier effects). In other words, costs other than for disease control have become more significant as the industry structure, and relative prices have changed over time. At present, costs other than disease control costs would account for > 4 2 % of total costs. In comparison, the costs of annual vaccination against

workforce. Poultry farm employment accounted for 9 0 0 jobs, and a further 4 , 6 0 0 jobs were provided by approximately 100 firms concerned with the processing of poultry or packing and grading of eggs. This was equivalent to 2 0 % of those employed in the food and drinks processing sector of the Province and three times the number employed in the ship building industry, traditionally a major employer. The total disease effect on the whole poultry sector and associated industries may be greater than the direct disease effects. This is in part due to the decrease in the numbers of producers and the increase in the importance of processing and the 'value-added' component and its wider impact on related industries, employment and 'knock on' effect related to the purchasing power of employees.

Implications for the future


The many changes associated with the Uruguay Round, and the increase in regional trading groups make it particularly difficult to predict future outcomes. Furthermore, the development of trade is strongly influenced by other aspects of economic and political change. If current trends continue, the total world trade in livestock products may be expected to increase steadily, although with the emphasis shifting away from beef and sheep meat to pigs and even more to poultry. However, if a worldwide slump should occur, total world trade in livestock products could dimnish. In addition to these broad tendencies, it is predicted that trade liberalisation and the reduction of barriers, will further expand trade in aggregate, and specifically in livestock products. This should be associated with rising average world prices, for agricultural and livestock products, which will benefit exporters, but which will disadvantage net food importers. One set of estimates suggests that whereas high income countries belonging to the Organization for Economic Co-operation and Development (OECD) will benefit annually by $ 1 4 1 . 8 billion from the year 2 0 0 2 , African and Mediterranean countries will suffer losses. Among LICs, China is expected to benefit greatly but most others will receive only modest gains ( 1 5 ) . Trade liberalisation is also expected to cause the prices of coarse, animal feed grains to rise. This will reduce the profitability of grain-fed intensive pig and poultry production, and may slow the rate of expansion in South East Asia. There may be scope for increased exports from low-cost producing countries like the USA and some EU members. The terms of trade may shift towards grassland-fed ruminant meat and milk, so these products may regain some of the trade lost to pig and poultry meat. The Sanitaiy and Phytosanitary Agreement allows importing countries to be challenged by suppliers seeking access to their markets. However, it may still be difficult for LIC suppliers to fulfil the legitimate regulations of an importer and even more

Newcastle disease have fallen dramatically in real terms. A preventive vaccination policy in 1973 would have cost 3 8 9 , 3 4 0 per year ( 1 9 7 3 prices) or 2 , 7 4 4 , 8 4 7 inflated to 1997 pnces. In 1997, a similar policy would have cost 5 4 8 , 0 8 8 (12). In 1996, poultry and eggs provided 7% of gross agricultural output of Northern Ireland ( 4 . 9 % of gross domestic product) and the agriculture sector employed 4 0 , 0 0 0 or 6 % of the

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to challenge rules that appear to be unjustified through the dispute settlement body of the W T O . Thus, although the Uruguay Round will extend and harmonise internationally agreed sanitary and animal health rules, and will expand the access for meat exporters to foreign countries, many developing countries may still be excluded. Trade in meat may still be restricted to countries that can afford relatively high levels of internal animal health and sanitary standards and the capacity to demonstrate that these measures are adequate to potential importers (8). The regional distribution of trade may change. Consumption of meat and dairy products in the high income OECD countries is stagnant or growing very slowly. Growth in

demand must depend on growth of population and incomes in the developing world, particularly Asia and Latin America, and the so-called transition economies of Eastern Europe and the former USSR. While there are some grounds for hope of recovery and economic expansion in the latter group of countries and in parts of Africa, there are increasing fears of the collapse of some of the fast-growing economies of South East Asia and possibly Brazil. The future expansion of world trade in livestock products is therefore highly unpredictable.

Les consquences conomiques de l'accroissement des changes mondiaux d'animaux et de produits d'origine animale
J . Leslie & M. Upton Rsum
L e s n g o c i a t i o n s d u c y c l e d ' U r u g u a y de l ' A c c o r d g n r a l s u r les t a r i f s d o u a n i e r s et le c o m m e r c e ( G A T T ) o n t c r l ' O r g a n i s a t i o n m o n d i a l e d u c o m m e r c e ( O M C ) afin de superviser la leve des que barrires de m e s u r e s ces pays ou des et la ne libralisation soient des changes sera fins des internationaux. normalise protectionnistes L'application par des sanitaires blocs et p h y t o s a n i t a i r e s utilises commerciaux

afin d'viter

mesures

rgionaux.

L ' h a r m o n i s a t i o n d e s m e s u r e s de lutte c o n t r e les m a l a d i e s a n i m a l e s a u s e i n d e s b l o c s r g i o n a u x e s t e s s e n t i e l l e p o u r q u e la l i b r a l i s a t i o n d e s c h a n g e s p o r t e s e s f r u i t s , m a i s u n e t e l l e h a r m o n i s a t i o n doit t e n i r c o m p t e d e s r i s q u e s sanitaires p o t e n t i e l s et du c o t d e s m a l a d i e s a n i m a l e s . L e s c h a n g e s m o n d i a u x de p r o d u i t s d'origine a n i m a l e s ' e f f e c t u e n t e s s e n t i e l l e m e n t e n t r e p a y s d v e l o p p s , b i e n q u e les p a y s e n d v e l o p p e m e n t r e p r s e n t e n t e n v i r o n u n t i e r s d e s i m p o r t a t i o n s et e x p o r t a t i o n s de v i a n d e de v o l a i l l e . M a l g r la l i b r a l i s a t i o n , la p a r t d e s p a y s e n d v e l o p p e m e n t d a n s le c o m m e r c e m o n d i a l ne d e v r a i t g u r e a u g m e n t e r c o u r t t e r m e . L e s a u t e u r s m e t t e n t l ' a c c e n t s u r les a v a n t a g e s du c o m m e r c e et de la l i b r a l i s a t i o n d e s c h a n g e s . Ils d o n n e n t d e s e x e m p l e s de l'impact d e s b a r r i r e s c o m m e r c i a l e s s u r les p a y s e n d v e l o p p e m e n t et de l ' h a r m o n i s a t i o n d e s n o r m e s z o o s a n i t a i r e s a u s e i n de l'Union e u r o p e n n e . Ils v a l u e n t e n f i n les c o n s q u e n c e s c o n o m i q u e s d'une a u g m e n t a t i o n d u c o m m e r c e g l o b a l d a n s le futur.

Mots-cls
Accord gnral sur les tarifs douaniers et le commerce - changes internationaux Organisation mondiale du commerce - Pays en dveloppement - Rglementation sanitaire et phytosanitaire - Viande.

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Repercusiones econmicas del creciente comercio mundial de ganado y productos pecuarios


J . Leslie & M. Upton Resumen
La R o n d a U r u g u a y d e l A c u e r d o G e n e r a l s o b r e A r a n c e l e s A d u a n e r o s y C o m e r c i o ( G A T T ) i n s t i t u y la O r g a n i z a c i n M u n d i a l d e l C o m e r c i o c o n el o b j e t i v o d e s u p e r v i s a r la r e d u c c i n d e b a r r e r a s n o a r a n c e l a r i a s y la l i b e r a l i z a c i n d e l c o m e r c i o a e s c a l a m u n d i a l . P a r a e v i t a r q u e a l g n pas o b l o q u e r e g i o n a l s e s i r v a de m e d i d a s s a n i t a r i a s y f i t o s a n i t a r i a s c o n f i n e s p r o t e c c i o n i s t a s , e s t p r e v i s t o e s t a n d a r i z a r la a p l i c a c i n d e t a l e s m e d i d a s . P a r a q u e la m a y o r l i b e r t a d d e c o m e r c i o d s u s frutos, es e s e n c i a l a r m o n i z a r las m e d i d a s de control z o o s a n i t a r i o que se aplican dentro de los distintos b l o q u e s r e g i o n a l e s , a u n q u e d e b e n hallarse f r m u l a s d e a r m o n i z a c i n q u e m i n i m i c e n los r i e s g o s s a n i t a r i o s y l o s c o s t e s d e e v e n t u a l e s b r o t e s d e e n f e r m e d a d . El c o m e r c i o m u n d i a l d e p r o d u c t o s g a n a d e r o s se c o n c e n t r a b s i c a m e n t e e n pases d e s a r r o l l a d o s , a u n q u e los pases en desarrollo d a n c u e n t a a p r o x i m a d a m e n t e de un t e r c i o de las i m p o r t a c i o n e s y e x p o r t a c i o n e s d e c a r n e a v c o l a . A p e s a r d e la l i b e r a l i z a c i n , e s i m p r o b a b l e q u e a c o r t o p l a z o a u m e n t e d e f o r m a s e n s i b l e la p r o p o r c i n d e t r a n s a c c i o n e s comerciales correspondientes a pases en desarrollo. Los autores h a c e n h i n c a p i e n las v e n t a j a s d e l c o m e r c i o y s u l i b e r a l i z a c i n . T a m b i n o f r e c e n e j e m p l o s d e la i n f l u e n c i a d e l a s b a r r e r a s al c o m e r c i o s o b r e la e c o n o m a d e p a s e s e n d e s a r r o l l o , y d e la a r m o n i z a c i n n o r m a t i v a e n la U n i n E u r o p e a e n m a t e r i a d e s a n i d a d animal. Por ltimo e v a l a n las c o n s e c u e n c i a s e c o n m i c a s del i n c r e m e n t o d e l c o m e r c i o g l o b a l e n el f u t u r o .

Palabras clave Acuerdo General sobre Aranceles Aduaneros y Comercio - Carne - Comercio internacional - Organizacin Mundial del Comercio - Pases en desarrollo - Reglamento sanitario y fitosanitario.

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Appendix
Table A W o r l d t r a d e in b o v i n e meat: t h e m o s t i m p o r t a n t p a r t i c i p a n t s in 1996 (10) (tonnes) Exporters Country Australia Ireland N e w Zealand France Netherlands Germany Argentina Canada Brazil Belgium-Luxembourg Quantity 954,436 460,022 457,679 427,011 402,754 401,925 324,702 275,765 177,083 159,716 P e r c e n t a g e of w o r l d total (15.3) (7.4) (7.3) (6.8) (6.4) (6.4) (5.2) (4.4) (2.8) (2.6) Country United States of America Japan Russian Federation Italy France Germany United Kingdom Canada Korea, Republic of Greece Importers Quantity 879,562 840,035 597,754 323,689 297,902 272,305 230,734 228,264 189,776 169,871 P e r c e n t a g e of w o r l d total (13.9) (13.3) (9.4) (5.1) (4.7) (4.3) (3.6) (3.6) (3.0) (2.7)

Table B W o r l d t r a d e in o v i n e meat: t h e m o s t i m p o r t a n t p a r t i c i p a n t s in 1996 (10) (tonnes) Exporters Country N e w Zealand Australia United Kingdom Ireland Uruguay Spain France India Belgium-Luxembourg Mongolia Quantity 380,797 216,604 108,586 58,639 13,532 12,814 10,081 8,613 6,740 5,000 P e r c e n t a g e of w o r l d total (43.7) (24.9) (12.5) (6.7) (1.6) (1.5) (1.2) (1.0) (0.8) (0.6) Country France United Kingdom Saudi Arabia Germany Japan Papua N e w Guinea United States of America South Africa Iran, Islamic Republic of Belgium-Luxembourg Importers Quantity 160,010 132,717 49,163 45,776 41,235 39,000 33,127 29,600 29,000 22,741 P e r c e n t a g e of w o r l d total (18.1) (15.0) (5.6) (5.2) (4.7) (4.4) (3.7) (3.3) (3.3) (2.6)

Table C W o r l d t r a d e in pig meat: t h e m o s t i m p o r t a n t p a r t i c i p a n t s in 1996 (10) (tonnes) Exporters Country Denmark Netherlands Belgium-Luxembourg China France United States of America Canada Spain Germany United Kingdom Quantity 1,043,183 910,677 689,545 546,835 458,100 400,479 347,480 222,458 205,918 170,176 P e r c e n t a g e of w o r l d total (17.6) (15.4) (11.6) (9.2) (7.7) (6.8) (5.9) (3.8) (3.5) (2.9) Country Germany Japan Italy United Kingdom Russian Federation France United States of America Greece China, Hong Kong SAR Netherlands Importers Quantity 912,277 900,706 707,590 560,107 515,702 385,100 273,038 125,301 123,544 98,922 P e r c e n t a g e of w o r l d total (16.3) (16.1) (12.6) (10.0) (9.2) (6.9) (4.9) (2.2) (2.2) (1.8)

456

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Table D World trade in poultry meat: the most important participants in 1996 (10)
(tonnes) Exporters Country United States of America France Brazil Netherlands China, Hong Kong SAR Belgium-Luxembourg United Kingdom Thailand Hungary Denmark Quantity 2,433,198 836,294 575,233 565,796 543,026 227,746 196,823 187,248 125,376 113,526 P e r c e n t a g e of w o r l d total (35.3) (12.3) (8.5) (8.3) (8.0) (3.4) (2.9) (2.8) (1.8) (1.7) Country Russian Federation China, Hong Kong SAR Japan Germany United Kingdom Saudi Arabia Mexico Netherlands France Belgium-Luxembourg Importers Quantity 790,834 771,438 658,625 518,941 274,294 241,263 211,570 191,081 122,758 118,822 P e r c e n t a g e of w o r l d total (14.0) (13.7) (11.7) (9.2) (4.9) (4.3) (3.8) (3.4) (2.2) (2.1)

Table E World trade in dairy products and eggs: the most important participants in 1996 (10)
(tonnes) Exporters Country Germany France Netherlands Belgium-Luxembourg New Zealand Australia Ireland Denmark United Kingdom United States of America Quantity 4,198,890 2,369,145 1,942,071 1,739,881 878,202 701,748 517,988 465,737 434,764 410,871 P e r c e n t a g e of w o r l d total (25.0) (14.1) (11.6) (10.4) (5.2) (4.2) (3.1) (2.8) (2.6) (2.4) Country Italy Netherlands Germany France Belgium-Luxembourg United Kingdom Spain Brazil Russian Federation Mexico Importers Quantity 2,558,208 1,970,748 1,503,695 1,207,798 1,124,787 626,417 570,363 357,925 354,843 314,811 P e r c e n t a g e of w o r l d total (15.5) (12.0) (9.1) (7.3) (6.8) (3.8) (3.5) (2.2) (2.2) (1.9)

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